Moving beyond RPS mandates to turbocharge renewable power  

 By Peter A. Darbee

I'm going to focus on several areas where we see significant opportunities from the perspective of a major energy utility. Because of where our company is located, we have the good fortune of having a lot of first-hand practical experience with some of the longest running policies and practices in areas like energy efficiency and renewables.

In conversations with other business leaders, I've heard more times than I can count that it's impossible or impractical to make much headway on greenhouse gases until we have better technology.

That is not the case. It's a red herring. Technologies are available and in use today that can make a significant difference. The progress that California has made over the past 30 years drives that home.

The biggest obstacle right now is a lack of will-not invention. For example, the idea that coal-dominant utilities can't do much-and shouldn't be asked to do much-until we find an answer on carbon capture and storage is absolutely wrong. I agree an answer must be found-there is much that can be done in the interim to address climate change.

We have to be willing to break from some deeply entrenched policies. But if we are as serious about climate change as many business leaders say they are, then we have to start talking about and taking accountability for these choices, rather than pretending our hands are tied until we clear future technology hurdles.

The first thing to remember is that climate is a long-term challenge. If we're nearsighted in our thinking, we're going to make a lot of bad choices-both financially and environmentally-because we'll misunderstand the risks and opportunities, or miss them altogether.

This is one reason why I am convinced that the federal government should set long-term national targets and timetables for reducing greenhouse gases. It would create clarity for business. It would create a basis for a national cap-and-trade program, which we strongly support. And it would create a context for thinking about the issue in the most constructive and logical way.

I think we're beginning to see that renewables need more than just mandates to reach their full potential.

Let me be clear: We strongly support California's renewable portfolio standard, and we've supported a national standard as well.

PG&E has been pursuing the California target aggressively and expects to meet the 20 percent requirement. Right now we've signed contracts that will get us to roughly 18 percent-including some of the largest commitments in the world for concentrating solar energy, as well as some of the first contracts for wave power and biomethane.

But despite the progress, it's also clear to us that if the goal is to really turbocharge the development and deployment of more renewables, the RPS requirement alone isn't enough.

Research shows that the potential for renewables in California is enormous. The National Renewable Energy Laboratory studied the potential for concentrating solar power in California and the Southwest. It found that just this one technology could theoretically provide upwards of seven times the energy needed to serve the state. So why is the state still stretching to get to 20 percent?

When you look closely, the reasons become apparent. We still face significant obstacles. Competitive pricing is an obvious one. But there are also transmission constraints, the intermittent nature of options like solar and wind, uncertainty surrounding the ability of some providers to deliver on contracts, and so on. We have to address these issues in an integrated, strategic fashion that blends incentives, standards, public sector investment, and other mechanisms.

The federal government can make a tremendous contribution by extending production and investment incentives for renewables for more than one year at a time, and expanding these incentives to regulated utilities. We should extend the incentives long enough to reduce the uncertainty, spur longer-term technology development and encourage fuller deployment. This would send a critical signal to investors to take the long view and commit to these projects.

For the Record is an excerpt of a speech by Peter A. Darbee, chairman, CEO and president of PG&E Corporation at the United Nations/Ceres Investor Summit in February 2008.

September/October 2008